The Sensex rose as much as 0.87 per cent, or over 600 points, to an intraday high of 76,358.79 in early trade. The Nifty traded at 23,610.70, up 0.72 per cent or about 170 points.
The rise is about more than good news. It also shows how traders had positioned themselves. Analysts said bears had built short positions in many quality large-caps, expecting FII selling to continue. With foreign money now coming back, those bets are being closed out quickly. Buying shares to close short positions adds to the rise.
"Massive value buying along with big short covering leads to such sharp surges in stocks, even in megacaps. The takeaway from this experience is that patient value buying will be rewarded," analysts said.
They see a combination of supportive factors. "Decline in Brent crude to $104, further weakening of the AI trade, continuing flow of good Q2 results and foreign institutional investors (FIIs) turning buyers have potential to accelerate the ongoing rally," they said.
The AI point matters for India. When money moves out of crowded global AI stocks, emerging markets like India can benefit. Analysts called the AI pullback "only a correction, not yet a crash," and said many AI companies are still reporting good results.
Financials lead; healthcare and energy see profit booking
Financial services led the gains, with Nifty Financial Services ex-Bank up 1 per cent. Nifty Chemicals, Nifty FMCG and Nifty Media gained up to 0.77 per cent. Private bank, cement, IT and consumer durables indices were also in the green.
Healthcare and energy stocks saw profit booking. Investors appeared to sell defensive stocks and buy shares that tend to gain when the economy improves.
On the charts, Nifty is back above its 50-day EMA near 23,170. Its RSI has risen to 61.03, above its average of 47.90, which points to stronger momentum. A put-call ratio (PCR) of 1.28 also shows a positive setup in derivatives. Analysts placed immediate support at 23,200–23,300 and resistance at 23,600–23,700. With the index already trading near that resistance, the coming sessions will show whether buyers can push it higher.
Why this matters for retail investors
The FII-DII numbers show a change. On Monday, FIIs bought a net Rs 3,114 crore of equities, their second straight session of buying. Domestic institutions sold a net Rs 392 crore, also for a second session. For months, domestic funds and SIP flows supported the market while foreign investors sold. Now FIIs are doing more of the buying.
For retail investors, analysts' message is to buy quality stocks patiently instead of trying to time short-term swings.
What comes next
The near-term risk comes from outside India. Results of the US mid-term elections are due tomorrow, and their effect on geopolitics will be closely watched. If the outcome is calm and oil stays lower, the rally could continue. A surprise could test the 23,200 support zone quickly.
(With inputs from IANS)
